Worldwide Exchange 6/18/25
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I'm Frank Holland, and you're listening to CNBC's Worldwide Exchange. Our show is live weekdays at 5 a.m. Eastern. Listen in.

Starting up the heat, reports say the president is weighing strikes on Iran, calling for its unconditional surrender, while Iran calls the comments hostile. And its leader says the battle begins and vows no mercy in its fight with Israel. Investors this morning just trying to make sense of it all. Also today, investors are waiting to hear what the Fed thinks of all the uncertainty when its rape decision, and maybe most importantly, its outlook, come out this afternoon.

For now, investors, they're just hanging in there. You can see right here, futures just slightly higher. It's Wednesday, June the 18th, 2025, and this is Worldwide Exchange on CNBC and streaming on CNBC+. Good morning, and thanks so much for being here with us. I am Frank Holland. Let's get you ready for the trend day ahead. We begin with the U.S. markets. The S&P and the Nasdaq both lower in two out of the last three days as a weaker-than-expected retail sales report and concerns about an escalation of conflict between Israel and Iran

It weighed on the markets. Take a look this morning. You can see a bit of a bounce back right now. The S&P and the NASDAQ fractionally higher right now. The Dow looks like it would open about 70 points higher. Let's take a look at the S&P leaders in the pre-market right now. Taking a look, you're seeing Textron. Those shares up more than 4%. AMD, those shares up just about 2%, followed by Oracle, Arista Networks, and Palantir, running out your best performers. Then you have the S&P laggards. Taking a look at those this morning. Evergy pulling back about 1.5%.

Microchip Tech pulling back more than 1%. Zoetis, a pet animal pharmaceutical company, pulling back about 1% and Expand Energy running out your worst performers on the S&P. Yesterday, we saw some big gains for oil up more than 4% on those Middle East concerns. Taking a look at oil right now, pulling back more than 1%, but you can see week to date an upside move for oil kind of dipping here and then a rise on these Middle East tensions. Again, oil up about 1% and 1.3% this week.

And on a down day for the markets overall, defense and oil stocks, those moved higher. Take a look at the action. Lockheed Martin shares up more than 2.5%. Chevron shares up about 2%. RTX, those shares up almost 1.5%. Similar story for ExxonMobil. Down here, Northrop Grumman, one of our pre-market leaders on the show yesterday, up about 1.3%. Take a look at those same names this morning.

We're seeing a lot of green on this board right now. Northrop Grumman up over a half a percent. Similar story for RTX. ExxonMobil, the only one pulling back, just pulling back fractionally right now. Take a look at currency as well. The dollar gaining nearly a percent yesterday. We have seen investors go into the dollar as a bit of a safe haven trade. Right now, the dollar fractionally lower. Week to date, you're seeing the upside move for the dollar up about a half a percent.

Week to date. But looking at gold, another safe haven actually pulling back yesterday. This morning, you can see it's pulling back again, just fractionally again. Week to date, gold actually down about 1.5%, maybe a bit counterintuitive. Also looking at bond yields this morning. They pulled back yesterday on a weaker-than-expected retail sales report. Also a bit of a flight to safety there. Also keep in mind, we've got a Fed decision today. Taking a look, the benchmark coming in at 4.38. A number of basis points lower than the level that we saw yesterday. The long bond down here at 4.88%.

Again, we're going to talk about the moves in the Treasury market a bit later in the show. OK, that is our setup now. We want to turn back to our top story, the Israel-Iran conflict. Airstrikes between both countries continuing this morning as the U.S. weighs its future role in the region. NBC's Alice Barr joins us now from Washington with the very latest on this story. Alice, good morning.

Good morning, Frank. President Trump is stepping up his public messaging, posting that the U.S. knows exactly where Iran's supreme leader is hiding, saying we're not going to take him out, at least for now. But adding our patience is wearing thin and just coming in, the Iranian ambassador to the United Nations is saying that there is a line that if crossed,

There would be a response. He says President Trump's remarks are very hostile and will be added to calculations about whether and how to respond. Amid the escalating conflict between Israel and Iran, a pivotal moment inside the White House as President Trump weighs how far to go to help Israel end Iran's nuclear program. Iran cannot have a nuclear war.

The president spent Tuesday in the Situation Room with his national security team calling for Iran's unconditional surrender while considering a range of options, including a possible U.S. strike on Iran, according to administration officials. One of Iran's most critical nuclear enrichment sites is buried deep under a mountain, and destroying it would likely require an American warplane

WITH A MASSIVE BUNKER-BUSTING BOMB. MANY LAWMAKERS IN BOTH PARTIES CALLING FOR CONGRESSIONAL APPROVAL BEFORE ANY MILITARY ACTION. "WE SHOULD HAVE SOME SAY SO ABOUT IT." "IF IT FLEW THE 52'S, WE'D BE RISKING

yet another war in the Middle East. Democratic Senator John Fetterman backing a U.S. strike. You can never have any real peace in the region, you know, if you allow or Iran is able to maintain a nuclear program. While the Senate's top Republican holds out hope for a diplomatic solution. Iran coming to the negotiating table and agreeing to end their nuclear program.

President Trump has for weeks pressed Iran to negotiate a deal, now signaling a possible shift. They should have done the deal. I told them do the deal. So I don't know. I'm not too much in a mood to negotiate. The U.S. has sent more military assets to the Middle East, and U.S. bases are at their highest alert level prepared for any possibility of an Iranian strike.

Two U.S. officials say Iran is prepared to strike U.S. bases in the Middle East if they choose to, though there are no indications anything is imminent. President Trump has said that any targeting of U.S. troops would be met with a forceful response. Frank. So, Alice, what do we know about how close Iran may be to making a nuclear weapon?

Yeah, that's an open and an important question. Back in March, the president's director of national intelligence, Tulsi Gabbard, testified on Capitol Hill that the intelligence community does not believe Iran is building a nuclear weapon. The president was asked about that, those comments on Monday. He said, quote, I don't care what she said. I think they are very close to having one. Vice President Vance noted that the U.N. nuclear watchdog recently determined Iran is not complying with its nuclear nonproliferation obligations.

Alice Barr live in D.C. Alice, thank you very much. Let's now turn to Europe and see how the markets there are handling these latest developments. Our Steve Sedgwick is in London with that and much more. Steve, good morning.

Yeah, great to see you, Frank. Very, very difficult for these European equities to find any momentum to the upside, given the backdrop that Alice was just talking about as well. Those same concerns that are affecting the US markets are affecting us here in Europe as well. So we actually came out of the gates up around about three, four tenths of 1% today. Then we got back down to the flat line. Now we're trying to rally again. And again, we're looking at the same things. We're looking at the Federal Reserve. We're looking at the US data and that...

awkward set of retail sales figures yesterday. We've also had data out of the UK. We had CPI data. You're not the only ones who have got annoyingly high inflation. We had a 3.4% figure here in the UK, which is going to be difficult for the Bank of England, which is meeting tomorrow, to cut rates with that as a backdrop. And services inflation had a high four handle as well, albeit in line with expectations. So the European equity markets here are

rallying a little bit, but again, too many macro factors going on for the market to make too much headwind. Plus the fact we don't have reporting season, so we haven't got the individual companies reporting en masse at the moment to try and give the market even more impetus. Let's take a look at which sectors are in positive territory, though, as we speak.

And we have the real estate sector, seven tenths of one percent higher. Insurers making a bit of a move to the upside, as are the rest of the financials in the banking sector. The very defensive bias utility sector, three tenths of one percent lower. Last night, the losers in the States were led by health care stocks, which were down over one percent. We've seen health care under a little bit of pressure here in the European arena as well today, down six tenths of one percent.

Autos just responding to concern that we saw in the US yesterday about the auto sector remaining volatile, but remaining under pressure in terms of retail sales. One little bit of good news today. The Swedes have cut interest rates. The Riksbank has cut another 25 basis points. Back to you.

Steve Sedgwick, live in London. Steve, always a pleasure. To turn our attention now back to the U.S., investors are also preparing for the latest policy decision from the Fed coming up this afternoon. The central banks expect it to hold its rate steady, but it will be all about the outlook as officials continue to watch the ongoing impact of President Trump's trade policies and now the Middle East conflict. For much more, let's bring in Philip Strahl, chief investment officer of the Americas at Morningstar Wealth. Philip, good morning. Good to see you.

Good morning, Frank. How are you? All right. Let's start with the Fed. We've got a lot of ground to cover. What are your expectations when it comes to the outlook? I think we all know there's not going to be a cut. But when we're talking about the outlook, what are you expecting and how do you see that impacting the markets in the near term?

Yeah, it's a good question. I think the focus will really be on the number of cuts that are going to be penciled in. Our expectation is going to be that it's going to be around two cuts still this year. I think there's a possibility that maybe some FOMC members will go down the one. I think that's what the Fed, the market will pay attention to for the most part today. Also focus on some of the outlook metrics on inflation.

perhaps, and also the labor market that are also part of the Fed forecast. So those are two things I think the market will be paying attention to.

Philip, I want to bring up something that we're getting from our CNBC Fed survey. A couple of data points. So like most people, 100 percent of the people that we survey believe that the Fed is going to keep rates unchanged. They see a 38 percent chance of recession. And this is the part I think is really interesting. They see the Fed funds rate at the end of this year at 3.89, significant downside move. So it's kind of interesting as we're looking at a possible recession, they see rates moving lower. What else do you think has to happen for potentially this scenario to play out?

Does the tariff situation need to be resolved in the very near future? What other things have to happen in the Middle East to keep oil prices down? Because obviously that impacts inflation. Kind of give me the setup. If you think that this is feasible, what has to happen?

Well, I think the inflation picture, I think, is really what's top of mind. We haven't really seen an impact in the last, you know, the May report, really. And I think that's where, you know, the Fed over the next couple of months will really kind of pay attention to whether we'll see a more meaningful impact on the inflation picture. And I think that's going to be ultimately what can give the Fed the ability to cut a couple of times this year, which is our base case.

As I mentioned, I think the Middle East situation is another kind of wrinkle into the macro picture. If you think about it, it's another sort of supply shock, if you will, on the oil side. And so I think markets will pay attention to that in terms of how that's going to evolve.

Right now, we're looking at the futures. They've actually kind of moved to the upside throughout the morning. They were kind of flat earlier, now moving to the upside. Some of the stocks moving at higher seem to be defense stocks. We were just looking at it a short time ago, stocks like Lockheed Martin, Northrop Grumman. What's your view on those? Now, some of those, they're kind of

underpriced when it comes to the market as far as valuation. Others like an RTX a bit more expensive than the market. Do you believe that there's a valuation play there? Or do you think all the run up in these stocks is already kind of priced in the fact that we're getting Middle East conflict, that we have conflicts in Ukraine still, and that we have some other global hotspots that investors are already aware of?

It feels like more of a temporary move. Obviously, the news over the past in a couple of days was in a more hawkish rhetoric out of the White House. And I would say the move we've seen in those stocks is probably more related to to that news cycle. You know, if we look at opportunities, if you think about valuations, you know, are you're the previous correspondent talking about health care? If you think about valuations, I think that's probably one of the key valuation spots right now in the U.S. market.

I don't remember. I mean, I'm sure you do. The U.S. credit rating got downgraded a bit ago. One of the issues was just our debt, our rising debt and the potential of also this big, beautiful bill increasing the federal deficit by two point four trillion over the next 10 years. One of the ways we obviously service our debt is by selling treasuries. When we're looking at the treasury market and also this Fed decision, what's your view of treasuries overall, whether it's for your investors or just the fact of.

yields and the impact that they have on domestic policy. Peter Bookbar from Blinkley Financials on our air yesterday came with a very interesting stat. He said about a decade ago, 50 percent of our treasuries were held by foreign buyers. Now that's down to about 30 percent. And the U.S. is involved in a lot of geopolitical issues. How do you see that impacting foreign buying of our treasuries and, of course, the yields? Yeah, look, I think the the

The fiscal backdrop has definitely been kind of a source of some volatility on the long end. We still like treasuries as an investment. We do favor the intermediate part of the curve, not necessarily the long end, given some of the volatility that we've seen. But we continue to think that the new cycle around the budget

bill that's going to make its way through through the congress in in the weeks to come you know can can provide you know some impetus for a bit more volatility uh but morningstar has a as a ratings agency uh we're actually held on to our triple a rating for uh the us uh the us government and so we still like treasuries as an investment and and probably some sentiment related uh

you know, volatility we've seen on the back of the Moody's downgrade a couple of weeks ago. Phil, we got to go, but very quickly, if the Fed outlook is hawkish, does that change your view on where you like bonds? Do you like the shorter end of the curve? If the idea is that those cuts are pushed out further?

Yes, I think that is something we'll have to reassess at that point. But look, I think treasuries are still a very useful tool for investors. We don't think, you know, we haven't sort of abandoned that as a key portfolio construction building block in our portfolios. All right, Phil Estrella, Morningstar, always great to see you. Thank you very much.

Thanks, Frank. We've got more to come here on Worldwide Exchange, including the high-priced Meta is apparently willing to pay for top AI talent, plus J.P. Morgan bets big on luxury and high fees and a major credit card overhaul. And then later, the beaten down Max 7 member Jeff Kilburg says is a buy. A very busy hour still ahead when Worldwide Exchange returns. Stay with us.

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And welcome back. Let's get a check on some of this morning's top stories. Silvana Hanal is here with those. Silvana, good morning.

Hey, Frank. Good morning. Well, we're watching cryptos this morning after the U.S. Senate passed a bill to create regulations for stable coins in a big win for the sector. Now, we're watching a pretty flat in early trading now. This is the first of its kind bill that sets up federal protections and oversight for the digital currencies. So the bill now heads to the House, which must approve it before President Trump can sign off on that bill.

All right, Reuters is reporting Elon Musk's XAI is set to raise $5 billion in debt despite modest investor demand. Now, the report says the debt raise was led by Morgan Stanley and three bond investors who were offered the debt. Tell Reuters they declined to invest with one, citing that XAI hasn't turned a profit yet and the fact that debt is not rated.

And Meta reportedly looking to open AI's roster of AI experts to help boost its own lineup. So OpenAI CEO Sam Allman revealing on his brother's podcast, Meta tried to

tried to poach his company's workers by offering sign-in bonuses as high as $100 million and even larger annual compensation packages. Now, Ullman says so far nobody from OpenAI has taken the offer. Now, we don't know how many people received the offer, and Meta did not immediately respond to a request for comment from CNBC. Frank.

You know, I'm just asking for a friend. Silvana, do they have any information in this report about the prices they're willing to pay for morning news anchors? It's not for me. I just know some people that are interested. I'll try to get you some answers, Frank. Silvana, we'll see you a bit later in the show. Thank you very much.

All right. Turn our attention now to personal finance and one of the top red stories on CNBC dot com over the last day. It's all about J.P. Morgan revamping its most premium rewards credit card with a nearly eight hundred dollar annual fee. CNBC dot com banking reporter Hugh Sun joins me now. Hugh, good morning. Good to see you.

Hey, good morning, Frank. So, you know, as you know, JP Morgan disrupted the credit card industry nearly a decade ago with the Sapphire Reserve when it came on the scene. It was so viral that they ran out of the metal for the cards. Now the credit card company is trying to push the envelope further by going upstream, upmarket. So the credit card fee, the annual fee, this is the headline that everybody caught, is now $795, which is the highest for any mainstream credit card out there. It's 45% higher than it used to be. But the

companies hoping to hook people in with about $2,700 in annual benefits. And these are things for like fine dining, stays at resorts, Apple TV and Apple Music subscriptions, things like that.

Frank? Yeah, pretty interesting. So I'm looking at your story, by the way, really interesting stuff. If you add up all the credits, you get the money back on the annual fee, which is kind of the way they kind of market it to people. Is there a sense of how many people actually use all these different credits? Like I'm seeing a credit here to go to certain restaurants or buy tickets off a ticket purchasing site and things like that. Do people actually use all the perks and does it essentially even out?

Well, I mean, I think what happened initially, you know, 10 years ago when they introduced this card is that the fact that people were using the cards too well and gaming the cards and not carrying balances actually caused the bank to actually carry a $300 million charge. So I think people are pretty smart about it these days. They carry spreadsheets, you know, their credit card maximizers. I think the issue here is, Frank, the fine print is where you can actually use these credits. So, for instance, there's a $500 credit for hotels. Now, that sounds really good, but you have to use...

You have to stay at a two-night stay at a hotel that's only picked and allowed by their sort of fine resorts network. And if you can stomach staying in a $1,000 hotel and getting a $250 credit at a place like that, it's a lot for some people to carry.

for instance, and the dining credit for $300, those are only at restaurants that are picked and selected by JPMorgan Chase. So there is the sense that some people simply won't stand for this, that they think $7.95 is really too high. They won't be able to stomach that. What they'll do is downgrade themselves to a lower card or perhaps look at a competitor card like Capital One, which carries like a $395 fee.

Yeah, it's really interesting. I'm looking at all these perks. I mean, it sounds really good, but you're right. You have to really plan it out to get the value out of it, especially for an almost $800 annual fee. Hugh Sun, great reporting as always and great to see you. Thank you very much. Thank you, Rick. All right, coming up here on Worldwide Exchange, President Trump keeps the pressure on Fed Chairman Jay Powell ahead of today's decision. But so far, that isn't moving the needle for interest rates. We're going to see if that all changes today. Much more Worldwide Exchange coming up right after this. All he has to do is lower it.

Europe's done ten lowerings, we've done none. Because of one numbskull that sits here, I don't see enough reason to cut the rates now.

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And welcome back. Counting down to the policy decision coming up at 2 p.m. Eastern from the Fed. The Middle East conflict and the possibility of U.S. involvement is now giving the Fed a new variable to consider. Traders, they're pricing at a near 100 percent chance of a pause and aren't seeing any move in interest rates until the September meeting. Today, we also may hear Jay Powell address the president's constant critiques of monetary policy.

The Fed has kept rates unchanged for three straight meetings while the ECB and the Bank of England, they continue to cut rates. Joining me now is Lauren Goodwin, New York Life Investments economist and chief market strategist. Lauren, good morning. It's good to see you. Good morning, Frank. Always a pleasure. All right. So, Lauren, I was just mentioning our Fed survey, our CNBC exclusive Fed survey. It shows the Fed funds rate at three point eight nine by the end of this year. Do you see a similar picture playing out with the Fed cutting rates pretty significantly this year?

That is our base case expectation this year that the Fed would cut one to two times because, frankly, that's what the Fed has told us so far. And our expectation for the meeting this afternoon is that the Fed will do as much as it can to do as little as possible for as long as possible. If you think back to the Fed's last meeting, that was mid-March. And since then, there's been lots of activity and flurry related to the economy and specifically unemployment, inflation concerns.

But there's been very little clarity that we've gained since then. And so I would expect the Fed's policy statement to go unchanged today and for any news at all to come from the statement of economic projections, that forward-looking forecast. But again, as we know, there's been very little clarity from the economy in the meantime since we've heard from the Fed last.

I expect they'll do their best to say very little. You know, it's kind of interesting that you said we got a little clarity. I think it's got even murkier. We have the Middle East situation, reciprocal tariffs due to a court ruling apparently being extended to July 31st before there's any real resolution. The president sending out letters, U.S. and China being unclear. It seems even a bit murkier right now. How does the Fed weigh all these different considerations?

One key element to your question, Frank, is the reality that the Fed can only do so much to tackle things like changes in trade policy, changes in the political environment, geopolitics playing a bigger role in inflation expectations as an example. And so the only thing that the Fed can do is look at its tools related to interest rates and decide whether it can move the needle on inflation expectations

and on unemployment. That's why we expect very, very little to happen today. And our base case expectation, of course, not being in the meetings is that the Fed is concerned about inflation expectations moving higher, even though we haven't seen that come back yet in the data over the course of the summer so far. And so it's an uncomfortable position for investors and for the Fed as well to have to wait and see how the data evolves, but we expect them to try to buy that time.

Does the Fed consider this whole quote unquote sell America trade? I mean, we've seen a lot of weakness in the dollar kind of rebounded yesterday as a flight to safety. But we've seen quite a bit of weakness in the dollar. And then also when it comes to treasuries, we've seen foreign buyers reduce their holdings about a decade ago. Fifty percent of our treasuries were held by foreign buyers yesterday.

Now it's down to 30, and obviously there's a lot of anti-U.S. sentiment around the world or at least tensions between the U.S. and other nations. How does the Fed weigh out that consideration with the idea that we could see this big, beautiful bill pass that would increase the deficit by $2.4 trillion over the next decade, according to the CBO?

much that that's going to be doing to think about this just yet but there are a few really important considerations for investors. Related to this dynamic for the past the for the path forward the first is to acknowledge at face value that the dynamic you're describing is real it's happening we are seeing it among not only retail but also the most sophisticated institutional investors. In the

even if it's just on the margin, questioning their geographic allocation. And we think this makes sense. Many investors, even those outside of the US, have had an overweight, maybe even a major overweight position to US assets in recent years. And they're questioning whether that's justifiable to the same degree as it was in the past.

The second thing I think that's really important about this question is the reality that the depth and liquidity of the U.S. markets, not only for treasuries and for the dollar, but also for private assets, is incredibly robust. There is still no alternative to the U.S. dollar. And so I do want to make the point that this transition we're seeing matters for flows. We think it matters for valuations.

But it is marginal from a geopolitical perspective at the moment. And so the role that the Fed would play in the long term could be to act as a buyer of last resort, engage in financial repression with respect to maintaining some treasury market volatility. But we don't think that we're anywhere near that stage in policy management of the issue. And so we anticipate that dollar

depreciation will continue on the margin and that treasury market volatility, especially in the long end, is a reality for investors. All right, Lauren Goodwin, it is always a pleasure. Great to see you. Thank you very much. You have a great day.

Thanks, Frank. All right. Coming up here on Worldwide Exchange, a housing sentiment shock. What's at stake ahead for two critical sector reads later today? Our Diana Olick is standing by. And as we had a break, here's a check on sectors so far in 2025 through the CNBC Cube. Industrials, communication services and utilities right there at the top.

Real estate, health care and consumer discretionary at the bottom. The big winner in June so far. That's energy up almost 9%. There's a check on your biggest winners in that sector in June. APA, Halliburton and EOG right at the top of the cube. Much more Worldwide Exchange coming up in just a few minutes. Stay with us.

That was President Trump on Air Force One before his return to Washington yesterday, laying out the ongoing situation with Iran. Sources are telling NBC News the president is now weighing all options, including a possible U.S. strike. Welcome back to Worldwide Exchange. I'm Frank Collin. Coming up this half an hour, the latest on the Middle East conflict and a closer look at one critical area that could impact the markets and impact your money.

We begin with the U.S. markets right now. The S&P and the Nasdaq both lower in two out of the last three days as a weaker than expected retail sales report and concerns about an escalation of the conflict between Israel and Iran has weighed on the markets. Take a look this morning, though. You see we're in the green around the board.

Right now, it looks like the Dow would open up about 90 points higher, the S&P and the Nasdaq higher as well. Taking a look at the Nasdaq 100 gainers in the pre-market, you're seeing right now AMD shares up 1.5%, ASML, Micron, Palantir, and On Semiconductor, your best performers. Then the other side of the coin, the Nasdaq 100 laggards. Taking a look at those, Microchip Tech pulling back more than 1%. Down here, you also see Atlassian, Starbucks, Palo Alto, and PDD.

Big gains yesterday for oil up more than 4% on those Middle East concerns. Take a look at oil this morning. You see a pullback down more than 1%. Week to date, the oil up about 1.5%. Oil and defense stocks moving higher yesterday again on those Middle East developments. Take a look this morning.

You're seeing a lot of green here. Exxon Mobil, the outlier. Northrop Grumman, big defense contractor, up over a half a percent. Similar story for RTX. Lockheed Martin up fractionally right now. Also take a look at tech. The Mag 7, all of them were lower yesterday. Taking a look this morning, we are seeing a bit of a rebound. Tesla shares up over three quarters of 1%. Tesla yesterday fell on news that it's pausing Cybertruck and Model Y production. Meta just in the news. Those shares up three quarters of 1%.

Out there trying to recruit employees with $100 million bonuses reportedly from OpenAI. Also taking a look at Apple. Those shares now 25% off their high. Microsoft just off the all-time high. Maybe even getting very closer in the futures market right now. Up about a quarter of 1%. Also looking at currency this morning. The dollar gaining nearly a percent yesterday. This morning the dollar pulling back fractionally. You can see week-to-date.

The dollar's up just about a half of a percent right now. Excuse me. Also looking at bond yields. Pulling back yesterday on a weaker than expected retail sales report. Also a flight to safety. Also keep in mind we've got a Fed decision today. Benchmark coming in at 4.38% right now. Again, head of that Fed decision coming up at 2 p.m. Eastern.

Now to our top story, the escalating conflict between Israel and Iran, both countries launching new missile strikes overnight. Despite President Trump calling for Iran's unconditional surrender, the Israeli military says fighter jets at uranium and weapons manufacturing sites in and around Tehran.

U.S. officials tell NBC News the Pentagon is deploying more fighter jets to the Middle East. The U.S. is only taking indirect action so far, including helping Israel shoot down incoming drones and missiles. President Trump returned to Washington early from the G7 summit yesterday, met with his National Security Council, and he spoke with Israeli Prime Minister Benjamin Netanyahu. Reports say the president is considering several options, including joining Israel to strike Iranian nuclear sites.

Now, leaders and investors, they're watching to see how Iran could respond and if that could potentially disrupt flows of oil, excuse me, and natural gas through two critical shipping routes, the Strait of Hormuz and the Bab al-Mandab Strait. Joining me now is Amrita Sen, founder and director of market intelligence at Energy Aspects and retired Vice Admiral John Fossey Miller.

former commander of the U.S. Navy's Fifth Fleet. Good morning to both of you. Thank you for joining us. Admiral, I'm going to begin with you. Is it possible for Rana to take steps to block the Strait of Hormuz in another critical point? And if so, how soon could they do it and how long could they do it for?

It is possible that they can block both the Strait of Hormuz and the Bab al-Mandeb Strait at the southern end of the Red Sea. The Houthis have a history, recent history, over the last several years of periodically putting mines in the water down at the Bab al-Mandeb. And the Iranians certainly have a capability not only in the Strait of Hormuz but throughout the Arabian Gulf region.

They have thousands of mines. They keep a number of those mines on hand, if you will, down at the waterfront so that they can put them into the water in a very clandestine way. It's likely that the first indication we have that there are mines in the water are when a ship hits the water. They can do that nearly overnight and lay a minefield out fairly quickly, and it's going to take some time to do the cleanup.

And Rita, coming over to you, I mean, I think the natural question here is what impact could that potentially have on the oil market? We have seen some upside moves, but certainly not a parabolic move based on some of the tensions and not a very sharp upside move. And we've seen pullbacks as well.

Yeah, I mean, look, we've gone through this period of the market still being concerned about oversupply in Q4, right? Because the demand outlook isn't great. OPEC is adding barrels. And I think that's what is ultimately kind of keeping the market in check. We also think that, you know, for Iran to actually close the straits, that would very much have to be the last resort, right? If they are trying to de-escalate, as we understand they are, you know, through the Omanis, et cetera, you know, dragging international markets

or even regional powers into this conflict by closing the straits is really not going to be the solution, right? I mean, obviously, we have about 20 million barrels per day of oil transiting through there.

about a quarter of global trade, about a fifth of global LNG trade as well. And obviously, that's hugely significant. That's why you've seen some risk premium. What's more interesting is in the freight market, you've seen it more so than crude. So, the shipping rates have obviously gone up. But again, we still want to reiterate that this will very much be the very last resort they take if they are serious about de-escalating.

Amra, I want to come back to you and lean on some of your experience in the region. I think one of the questions that a lot of just regular Americans have is exactly what is going on with Iran. Are they actually trying to build nuclear weapons? And if they are, does Israel alone have the ability to essentially take them out or will they require significant U.S. help?

Well, to answer the second question first, I do think the Israelis have the capability of taking out the nuclear weapon facilities in Iran. Otherwise, they wouldn't have undertaken this endeavor all by themselves. So the assumption must be that they're going to be successful, and they think that they can be successful. And I happen to think that they can be.

What's going on with Iran and their weapons program, that's the great question. And it's been a great question for almost all of this century. And the Iranians have been way less than forthcoming in terms of what they're doing and what their intentions are. Now, what we do know is that they have enriched a good amount of uranium, enough to build several bombs, well above the 5 percent needed for peaceful nuclear power or for medicinal research.

and usage. So the only reason to go above 5% and they have a lot of uranium enriched at 60% is if you're going to build a nuclear weapon. And so because Iran hasn't been forthcoming, I think it's safe to assume that they do plan on producing a nuclear weapon. And that would be obviously very destabilizing in the region and throughout the world.

And Marina, I want to come back over to you. So the admiral is obviously laying out some of the concerns that seem to be, you know, with the administration is that Iran is trying to enrich that uranium for weapons purposes and just the possible impact that could have. If there is a sustained attack on Iran, either from Israel or from the U.S. and Israel, and those Iranian barrels are taken off the market, what does that do to oil prices? And does it have a significant impact in the short term and long term or just the short term?

I think that's a great question. And I think that's something the market hasn't really grappled with yet. The focus has been on the here and now and that, you know, we haven't really seen energy infrastructure being disrupted. We've seen a little bit of an outage or attacks on kind of South Pars 14, uh,

like a refinery in Israel being taken down and a couple of kind of, you know, LPG outages here and there. But the reality is if we were to lose Iranian barrels, about 1.5 to 1.6 million barrels per day of Iranian oil currently flows into China. So China will have to seek alternatives.

OPEC has that spare capacity to give. That's not going to be the issue. But there are questions about whether Middle Eastern OPEC members necessarily want to get drawn into this conflict. Do they want to be seen to be increasing production just as Iranian barrels are going down? I think that's a fair question to ask. Of course, ultimately, they will serve their customers. India, China will be critical. And as long as they want the barrels, OPEC will meet that.

I think longer term is the more interesting question. You know, we've seen this, you know, during the past kind of Iranian revolution. They used to produce six million barrels per day. Since that revolution, they never went back above four million barrels per day. What are we looking at? Like what kind of an Iran are we looking at? Are we going to see some significant degradation in their upstream production?

you know, do we just basically see oil production kind of gradually decline from the kind of three, seven, three, eight to two, two and a half. Those are the big unknowns. And I think the more interesting question the market has to think about for those medium term balances is that at the moment, everybody's like, Oh, sanctions are going to get lifted. Uh,

and we're going to get more Iranian oil. But I think there is a risk that over time, if what's going on is prolonged and if we don't get something very stable, you could actually get downside risk to Iranian production. Emerita Sen, Vice Admiral John Miller, great to have you both here. Thank you both for your time and for your insight. You both have a great day. Thank you. Thank you. All right, coming up here at Worldwide Exchange, add another list, another name to the list of major companies announcing layoffs in recent months. We have the full story coming up right after this. Stay with us.

Welcome back to Worldwide Exchange. Market flash on Hasbro becoming the latest company to announce layoffs this year, cutting about 150 jobs or about 3% of its global workforce. Shares of Hasbro up just fractionally right now. The move by the toy maker marks the latest in its cost-cutting efforts as it grapples with tariffs. Hasbro sources about half of its toys and games sold here in the U.S. from China.

All right, coming up, we've got the one word that every investor has to hear today and the stock pick that every investor needs to know, plus fresh cracks for housing. Diana Olick breaks down the new concerns taking shape for the sector. We'll be right back after this. Welcome back to Worldwide Exchange. We get fresh housing data later this morning with starts and building permits. The numbers come on the back of data this week pointing to a major chill in the sector. Diana Olick joins us now to explain what's behind all of it. Diana, good morning.

Good morning, Frank. Yeah, we got the June builder sentiment from the home builders yesterday, and it dropped unexpectedly from May. The street was looking for a slight improvement, probably because of tariff delays and negotiations and a stronger stock market. But what this really shows is it's a bigger consumer problem. The index is now so low that the only other time since the Great Recession that it's

been lower was in April of 2020, of course, when the pandemic shutdown hit, and at the end of 2022, when mortgage rates shot higher after that. Now, this goes along with Lennar's quarterly earnings Monday, which were mixed, but guidance was lower than expected, and the average home price was down nearly 9% from a year ago. On the analyst's call yesterday, Lennar chairman Stuart Miller was clear.

The macro economy remains challenging as mortgage interest rates have remained higher, while consumer confidence has been challenged by a wide range of uncertainties, both domestic and global. Across the housing landscape, actionable demand has been diminished by both affordability and consumer confidence.

Now, 37% of builders in that NAHP sentiment June survey said they cut prices, which is the highest share since they started tracking this three years ago. It's up from 34% in May and 29% in April. And as you said, in a few hours, we'll be getting housing starts and building permits. And given what we've seen so far, those numbers for single family, at least, will likely come in lower. Frank.

So, Diana, right now I'm looking at Mortgage News Daily. I know it's a site you use for mortgage rates. Mortgage rates are actually down year over year, about 15, 20 basis points or so. How is that impacting demand and also the housing market? And then you mentioned the reports coming up later. We got the Fed coming up later. How does the Fed actually impact housing prices and rates when it comes to mortgages?

Well, the Fed doesn't set mortgage rates, just to be clear, and it's complicated to explain too much, you know, how MBS and mortgage rates follow. But what they do follow is what the Fed is thinking. So, yes, we've seen mortgage rates slightly lower than they were a year ago. But honestly, since April, rates have been moving in this very tight range from 6.8 to 7 percent on the 30-year effects, really haven't moved very much.

despite everything going on in the world. So it's not going to be, look, nobody's expecting the Fed to cut rates today, but it's going to be that message. What is the Federal Reserve thinking? What are they thinking about the economy? And that's what could affect rates either higher or lower. But again, despite a lot of commentary we've heard and despite all sorts of things going on in the world, in the economic situation, tariffs, et cetera, you know, they just haven't moved that much. And what most are saying is this is the new normal on mortgage rates. Dan Alick, thank you very much. Always great to see you.

Coming up here at Worldwide Exchange, making the case for this MAG7 member, fighting to turn positive this year while Jeff Kilburg calls the stock his top investment idea. We're going to reveal our mystery chart coming up right after this.

and one more quick check of futures out of today's big Fed decision. You can see we're in the green across the board right now. I believe the NASDAQ hitting its highs in the morning. The Dow looks like it would open about 90 points higher. Defense stocks helping to lead the charge. Archer Aviation, Arrow Environment, Smith & Wesson, and up all three of those, up more than 1%. You're seeing a bunch of other names up.

up higher as well. And for the record, watch. We also have the aerospace and defense ETF, the ITA. Right now you can see it's up just about a half a percent. For much more on the trading day ahead, let's bring in Jeff Kilburg, founder and CEO of KCAM Financial and a CNBC contributor. Jeff has a new piece on CNBC Pro looking at how to trade the S&P's 500 March to record highs using options as volatility remains undeniable.

All right, Jeff, we got to start here. Has the thesis changed at all with everything that's going on in the Middle East? I have a feeling that you researched and put this piece together before all this quite ramped up.

Yes, you're absolutely right, Frank. And it is tough from a micro perspective to look at every tweet that comes out. It seems like the market is kind of tilting hour by hour. But I think in the bigger picture, this March higher to retest these S&P 500 all-time highs is underway. Call it a melt-up, call it what you want. But if you remember just a couple months ago, Frank, when the S&P was down at 4,800, we are 25% higher now at 6,000 in the S&P 500. And with all the positivity out of earnings, we're

with the way we see some consumer strength and the way the profitability is still coming to the U.S. economy, I think we are going to see the shorts continue to be on the run. All right. With that in mind, what's your word of the day today, Jeff?

My word of the day is rebalance. And why am I saying rebalance? I think it's prudent, Frank. We talked about all the emotion that's been injected in the marketplace. Go back to April. I was one of the lonely bulls out there. You can count on one hand how many people actually bought the market. We have a lot of hindsight traders out there and a lot of analysts reconfiguring their S&P 500 targets after the market.

reconfigure them and that 20% drop but I want to rebalance into this because I think we see a test a new all time high will be established here hopefully an early Q3 but if you rebalance in that I don't know if sustainable I think there is volatility in the marketplace is a new volatility regime in 2025 and that's where it makes a ton of sense to rebalance in book profits when we see the market move in this fashion this manner you're going to expect more volatility specifically when you talk about all the global

All right. So as we're rebalancing, how are you repositioning or rethinking about defense stocks? We were just talking about them a short time ago. They're moving the market higher. Do you think that all the geopolitical conflicts and tensions are those priced into those names? And you look at some of them like a Northrop Grumman trading below the valuation of the market, an RTX trading just above the valuation of the market. I mean, how do you view these stocks and the potential for earnings growth with a lot of the things going on globally right now?

Well, I think these defense stocks or look at XLI, that is the sector spider industrial ETF. And I think when you talk about some specific names that I own, look at Lockheed Martin. That's been somewhat of a laggard. But as you continue to see these global geopolitical tensions ramp up, names like that will pick up. So I do not want to trim our exposure to industrials or specifically to defensive names because that has been the leading sector for the S&P 500.

nearly 10% year to date. I think where it makes sense is, if you remember, Frank, going back to Q4, even Q1 of this year, I was pounding the table, concerned about MAG-7 being over-concentrated. And what have we seen? We've seen a massive repricing, a revaluation of MAG-7. So right here, right now, that's where it makes sense. We've got to get your pick in. We're almost out of time. Well, Frank, I've got to let everyone know how to get into the pick, but

Amazon. Amazon's the pick, Frank. And why? Because the last six months, it's down about 7%. You saw a lot of people profit-taking. But the way they're doing custom chips, the way they're approaching AWS, that's a 41% growth engine year over year. Just AWS by itself is a trillion and a half dollar value. Jeff, we've got to leave it there. Amazon's your pick. Shares up about a half a percent. Thank you very much. Always great to see you. One more quick look at futures. Higher across the board right now. S&P up about a quarter of a percent. The NASDAQ up about a third of 1%.

You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.

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